Doing Business Strategy

33 Pages·2011·0.296 MB·English

by  Robert Galavan

DOING BUSINESS STRATEGY

ROBERT GALAVAN
Published by NuBooks, an imprint of Oak Tree Press, 19 Rutland Street, Cork, Ireland
www.oaktreepress.com
ISBN: 978-1-84621-018-1 (PDF)
ISBN: 978-1-84621-071-6 (ePub)
ISBN: 978-1-84621-090-7 (Kindle)
© 2004 Marion O’Connor, John Cullen, John Mangan and Oak Tree Press.
All rights reserved. This eBook may not be reprinted or distributed in electronic, print, web
or other format without express written permission.
KEY LEARNING OBJECTIVES
• Understand what strategy is.
• Get an introduction to the key tools of strategy.
• Identify the key elements of the strategy planning process.
• Learn what contributes to successful (and unsuccessful) strategy
implementation.
INTRODUCTION
Let me start by nailing my colours to the mast and stating that strategy is an essential
element of all organisational success. Now some will easily agree with that statement,
while others will provide a ferocious challenge in the name of luck and serendipity. Those
who argue against strategy as an essential element of success will put forward the case of
some organisation they know of that had no idea where they were going, but got lucky
and made it big.
One fundamental flaw in this, and many other, arguments like it, is an assumption that
you can have ‘no strategy’. It is certainly conceivable that an organisation may have ‘no
explicitly shared plan’, but individuals will always have some sense of what they want …
dreams of the future count as plans. The other fundamental flaw in the argument is the
belief that ‘a plan’ means ‘a strategy’. Certainly plans form part of many strategies, but the
absence of a plan does not mean the absence of a strategy.
Even in an organisation that does not plan, every action taken is a step in implementing a
strategy. The guidance for strategy in such circumstances comes not from a view of the
future, but from the experience of the past and the ingrained cognitive characteristics of the
strategic leaders. Even without plans, people and organisations do not behave randomly.
They follow a course, which may not be linear or obvious, but which does follow a pattern.
In the absence of a plan, it is that pattern that describes the strategy. The implication is that,
if executives are to understand strategy better, they need to deal with strategy not only
from the perspective of the future (where they want to go), but also the past (where they
have been and what they have done) and the present (who they are and where they are).
Ultimately, the goal of strategic leaders is to help their organisations find a fit with the
environment within which they operate. This can be done from the outside-in or the
inside-out:
• From the outside-in, organisations identify a desired position in the
environment and build the capabilities to compete successfully.
• From the inside-out, organisations clarify their capabilities and identify new
positions in which those capabilities will allow them to compete successfully.
Either way, strategy from the perspective of the future requires executives to make tough
decisions about the alloc ation of resources. At the same time, they must recognise that their
success will be measured not on the quality of their plans, but on the results of their
actions.
While doing strategy, some will get lucky. But I like to remember the golfer Arnold
Palmer's response to a journalist, when asked about the number of lucky putts he had in a
round of golf. He said: “It's like this, the harder I practise, the luckier I get”.
If adapted a little, this gives my definition of luck for organisations: the point where
preparation meets opportunity. Strategic planning in this context is not about coming up
with the right answer, it is about preparing for an uncertain future. In other words, the
plan is not an end in itself, the planning is equally important. Giving executives the time,
the skills and the motivation to engage in strategic thinking is part of the organisation’s
preparation for tomorrow’s opportunities. What follows in this eBook is a framework that
should help you with your practice.

A STRATEGY FRAMEWORK
I have to confess that I like the idea of roadmaps or models or frameworks (which is no
doubt a result of my experiences and so I continue the pattern). I think a framework, and I
mean ‘a’ framework, not ‘the’ framework, helps to provide a starting point. Some will
argue that strategy has no start point or indeed end point, that it is a continuous and
iterative process through which executives develop their organisation. Of course, that is
correct, but not very helpful, because if you are reading this book, you are probably
looking for a start point. So I offer a framework (Figure 1) in the same way as I would offer
a map to a climber on the side of a mountain. Not really to get you started, you have
already done that, but to help you understand better where you have come from, where
you are now and the implications for where you intend to go as you start the rest of your
journey.
FIGURE 1: A STRATEGY FRAMEWORK
DIRECTION-SETTING
Where do you expect to go?
What are the stakeholders'
expectations?
What are your vision, mission and
goals?
INTERNAL ORGANISATION
EXTERNAL ENVIRONMENT
ANALYSIS
ANALYSIS
Who are you?
Where are you now?
What resources have you available
What options have you got?
for the journey?
Key Success Factors Core Competences
MAKING STRATEGIC
CHOICES
ASSESSING THE GAP

ACTIVITY PROGRAMME
Monitor and review progress
DIRECTION-SETTING
Direction-setting helps by providing the organisation with a target that is the equivalent of
giving a sailor a point on the horizon. It doesn't tell you how to get there but it makes it
much easier to recognise when you are going off-course.
Organisations articulate their direction in a variety of ways and over a variety of time
horizons. To add to the confusion, you will see organisations use terms like vision and
mission interchangeably. For our purposes, let us define direction-setting as a complement
of business definition, values and goals (Figure 2).

FIGURE 2: DIRECTION-SETTING
Business
Values
Definition
Mission
Long-term
Goals

Defining the business
Defining the business plays two important roles:
• It encourages managers to discuss what business they are in. This may seem like

such a basic point, but I am regularly told by workshop participants that they
never actually thought about what business they are in. More worrying for me
is the implication that they never thought about what business they are not in.
• A clear business definition provides the basis for strategic focus. When I work
through this process, even with relatively small businesses, executives are often
surprised to see how fragmented their organisations really are. A fragmented
approach is usually an indicator that managers will be unable to give the
focussed energy that is required to be the best and to win.
Business definition (Figure 3) requires you to answer three simple questions.
• Who are my customers?
• What products or services will we offer them?
• What organisational processes will we use to deliver the above?

FIGURE 3: BUSINESS DEFINITION
Customers
Products
Processes

For example, you may define your business in terms of larger commercial organisations, to
which you sell big-ticket proprietary technology, using qualified engineers in a
relationship marketing approach. Alternatively, you may focus on medium-sized business
customers, to whom you sell a range of branded products through a branch network. The
broader the definition, the more difficult it is to provide the focus necessary to be the best.
As a rule of thumb, you know you are making progress when you can state clearly the
customers you will not sell to, the products you will not sell, and the processes you will not
use.
Identifying the values
Value statements have become essential for most modern organisations. Yet, at the same
time, very few seem to understand why they have them. Many organisations will publish
them on their websites a nd in their corporate literature, but have little idea of their true
value.
The cynical approach to organisational values is to create a list of all those values that
would make the organisation a great place to work, then publish the list in the belief that
you have delivered on your obligations. The problem is that, within an instant of the staff
seeing the list, they know whether the organisation lives the values. If you get the list
wrong, they know it, they see it for the cynical exercise it is, but worse, they now see your
entire strategy process tainted in the same way.
You must be clear about why you want to identify and codify your organisation’s values.
A valid approach is to identify values that underpin the behaviours that provide an
economic rationale for your organisation’s success. The purpose of a value statement then
is to capture the feeling, emotions and deeply-embedded principles that guide the human
energy in your organisation.
But what if you don't like the values as they are, what if you want to change them? My
simple advice is go ahead and talk with people about your concerns and the need for
change. Identify the behaviours that will change as a result of the new values. Show
people, by example, how they bring success. When you can point to the changed
behaviours of the strategic leaders, when you can show people the values in action, when
you can show people the results of those actions, then and only then can you publish the
“new” organisational values.
Setting the goals
Collins and Porras (1996) suggest setting BHAGs (pronounced beehags) or Big Hairy
Audacious Goals for your organisation. These are goals with a very long-term horizon, up
to 30 years, that set the tone for everything to follow. For example, Sony's BHAG from the
1950s was to become “the company most known for changing the world-wide poor quality
image of Japanese products”. Goals like this stretch and challenge the organisation to step
up to the mark, they tug at people both on the cognitive and the emotional levels.
Not all organisations will set goals with such a distant horizon or indeed at such lofty
heights. However, all organisations do need to set long-term goals with at least a three-
year to five-year horizon. Even in today's fast-moving economy, long-term goals are
essential to provide that mark on the horizon. Long-term goals provide the means by
which you will judge progress on your strategic journey.